Neston & Beyond: Happy New (Financial) Year

Yes, it’s arrived, a new financial year, and with it some pretty seismic events anticipated. So, what have you got to look forward to?

Increased Personal Allowance.
This is the amount of income you can receive without paying tax. Increased from £10,000 per annum to £10,600 per annum.

Increased ISA Allowance.
The amount you place in a tax free savings account or investment each year increases from £15,000 to £15,240.

State Pension Increase.
The ‘triple lock’ has kicked in, and so state pensions will increase by an inflation busting 2.5% from this month.

Sorry, I can avoid it no longer. There is an elephant sized shark in the room, and to be honest, I am just pussy footing around it; ‘Pension Freedom’, and I am indebted once again to the late great Groucho Marx:

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”

I will not attempt to describe the changes here, they are well publicised already. What I will say however is the political disingenuousness of the changes to pensions is immense and amazingly, the short term nature of governments, and let’s be fair, the great voting public, never fails to astound.

You will be able to read, listen, and watch huge media coverage as pension companies struggle to deal with enquiries. There is even one ‘newspaper’, and I use the term broadly that is bleating on that some pension companies are not even open today, a bank holiday! Then you can watch the media coverage of the savers being misled, or making catastrophic errors of judgement. Then, in no time at all it will be adjudged to be the fault of the pension company, or, wherever cosmically possible, the adviser who set up the plan 10, 20 or even 30 years ago. Said adviser will be dragged from their own retirement to face an ambulance chasing claims management company seeking 30% of the value of the customers government sponsored error.

However, what about ‘Pension Wise’ the much toted ‘pension guidance’ being delivered by Citizens Advice and The Pension Advisory Service, both fine organisations. Well so far, all it appears to be is a catchy title and a slogan. If the press is to be believed, I’d pack in tomorrow. If we take half of the press speculation as something near the truth, between 250,000 and 500,000 might seek such ‘guidance’ this year. Well, get in line, because it has been reported in the whole of the UK, there are only 294 ‘guiders’. So, if every guidance session takes an hour, this would take about 12 months, and then there would the next batch of over 55’s…

Of course, many will not seek ‘guidance’ and just call their pension provider, who will ask some questions in an attempt to make sure you know what you’re doing, but will of course not advise you.

Finally, there are those who will seek advice, and we face another dilemma. In the strangely unregulated world of the financial services regulator, there is no such thing as an insistent client, that is one who the adviser transacts business for at the client’s insistence, even though the advice is not to.

You know, there are people who suffer a condition known as ‘Body Identity Integrity Disorder’ or ‘Body dysmorphic disorder’. Such people in extreme cases feel they would only be happier if a healthy and functional part of their body were to be removed; a leg, and arm, an ear. How dreadful to feel this way. How mad is it some of these people have actually found surgeons plainly barking who will actually perform the surgery at the insistence of the patient.

So, advisers such as I will face clients insisting on making a mistake and what do we do? Refuse? Refer to Pension Wise?

If you’re terminally ill, or burdened with huge debt, or the amount in your pension pot is negligible, then there might be a case for cashing in. Just remember, we are all living far longer than our parents and grandparents, and retirement for many will be 25, 30 or more years.

Think on.

Bye for now.

John.

Disclaimer: ‘Neston & Beyond’ and similar articles written by me are my personal views and the sole aim is to where possible inform, sometimes amuse, occasionally entertain and hopefully, if all else fails, at least be interesting. In no way can any of what you read here be taken as advice of any form, be it parental, lyrical, electrical, prognosticative, desirable, ichthyological, astronomical, factual, governmental, statistical, financial, legal, marital, occupational, political, philatelogical, sociological, incidental, accidental, fiscal, zoological physical, biological, medical, dental, accidental, haberdasherial, cosmological, or tangential.